WINDHOEK – While revealing that the implementation of Namibia’s Industrialization Policy Strategy is at a very advanced stage, Trade and Industry Minister, Calle Schlettwein, yesterday noted that what needs urgent attention is the structural reform of the economy.
“A weak productive capacity and poor links between manufacturers and distributors and retailers are part of the striking constraints to growing productive capacity and the consumption of locally manufactured goods. High margins in the retail sector, often to the disadvantage of both consumers and local producers, further constrain the development of domestic value chains,” said Schlettwein during the second annual general meeting of the Namibia Trade Forum and the launch of the Namibian Retail Charter negotiations.
“I am getting increasingly concerned about the rising costs of food and other consumables and thus the cost of living. Together with rising costs of utilities and industrial and domestic properties it will be difficult to achieve competitive gains for industrialization and also to improve living standards for the majority of Namibians,” warned Schlettwein.
The Minister of Trade and Industry last consulted with stakeholders in the retail and distribution sector about 15 months ago on how to work together to achieve collective developmental objectives.
Also, during the past 20 months there has been a consistent and unmistakable theme in all Schlettwein’s consultations and engagements of ‘Growth at Home’ which emphasizes the promotion of industrialization based on commodities that can be locally produced and the value chains that can be developed around them.
“The need for transformation of this sector so that it meaningfully contributes to economic growth, job creation and closing the gap in income disparities culminated in the need to develop a public-private dialogue through which the needs of government and the ambitions of the private sector are accommodated. A Retail Charter, which would contain binding obligations for both, is viewed by me as the most suitable outcome,” said Schlettwein.
Namibia is still a net food importing country of most consumer and industrial goods, with a sparsely distributed population that has access to a diverse array of goods and services, efficient distribution networks with vertically integrated operations and convenient shopping malls in most urban towns.
Schlettwein elaborated that retail activities make it possible for producers of goods to connect to consumers and that an efficient distribution system allows for various economic activities to take place, especially the linkages created down and up-stream, as well as the consolidation of value chains. “A very efficient distribution network does exist, but the problem is that domestic goods are mostly not part of supply chains,” warned Schlettwein.
According to the minister, Namibia remains an attractive destination for retailers, especially foreign-owned, due to advances in economic integration within the Southern African Customs Union (SACU) and the Southern African Development Community (SADC), which has resulted in a very open economy.
However, Schlettwein said most of the investments in the retail sector are foreign-owned and these investment flows are the positive outcomes of Namibia’s macro-economic stability, a conducive investment climate and the country’s high rankings in ease of doing business and competitiveness in Africa.
Schlettwein said that in order to reap the benefits from growth in the retail sector “we must ensure that we balance the risks in this sector so that win-win situations for economic growth and returns on investment are both achieved. One of the aspects that has emerged is the displacement of the small artisanal bakeries, florists, butcheries and small family owned mini markets. This is replacing domestic productive capacity by imports from elsewhere by foreign retail chains and even foreign-owned corner shops and smaller retail outlets. This has resulted in reduced participation of Namibians in the retail sector and its supply chains and the crowding out of local products.”
Schlettwein added that he is encouraged to note that there are some retail companies who have committed themselves to the process of utilizing domestic productive capacity but noted with concern that there are also many retailers who have not joined the process.
“The fact that these companies de facto refuse to dialogue is a lost opportunity. If one does not dialogue one is excluding oneself from influencing the outcome and one therefore must at the end of the day live with what others have decided. It is important to realize that the outcome of this Retail Charter will not be binding only on those who are participating but on everybody. I therefore urge all retail operators and distributors to come on board,” said Schlettwein.